This past tax year I used Turbo Tax for the first time, all other years I did my own taxes. I received a letter from the IRS stating I owed additional money for the '05 tax year. It basically read:
"We changed your 2005 Estimated Tax Total reported on your return. Estimated Tax Total may include Estimated Tax Payments, credit applied from another tax year, or payments received with an extension of time to file. As a result of these changes, you owe $997.38, blah, blah"
The amount above was initally $968 + $14 in interest. Well I reviewed my return and the same $968 was the amount of state refund I received from the previous year. That amount was properly noted on my 1040, line 10, so it was added to my adjusted gross income. On page 2 of my 1040 on line 65, this same $968 was added to my taxes "2005 estimated tax payments and amount applied from 2004 return"
Not sure why Turbo Tax put the $968 amount here but I'm assuming this is why I owe this amount. Anyone have an idea of what I did wrong or what TT did wrong??
I'm pretty sure I owe the $968 because Turbo Tax entered that on line 65 which was deducted from the tax I owed. That is the question, why did TT put that refund amount on line 65? I guess I need to ask TT that question.